All Forum Posts by: Wes Brand

Pets are really up to you, they're a risk, but there could be some reward there. If your lease says "no pets" don't budge unless you legally have to.

They can cause damage. You can usually charge extra (but check the local laws, I believe there are some states where you can't). Depending on location allowing pets will reduce your vacancy rate to near-zero, or do very little. Make sure your insurance doesn't have any limitations on animal breeds or, if it does, communicate them to your tenants. 

Your returns are wrong. CoC is ~6%, not 15%, using your numbers (you put 44k cash into it, and you're getting back 2688/yr. You'll want to look at insurance with the pool, I suspect it'll be higher than 100/month. Also, pool maintenance will probably push your maintenance budget over 110/month.

Are you rolling capex and maintenance into the same budget? If so, think about how many years of life certain "big ticket" expenses (roof, furnace, hot water heater, siding) have left and how much it will cost to replace them and make sure you budget enough to cover that. 

I see no property management fees here. You should include them in your analysis anyway because otherwise you're working for free and likely to get sucked into a bad deal that only works because you're the one doing the PM. Generally mortgage is not included in the expenses column, because it's a debt-repayment / equity building thing. (don't get me wrong, it does reduce your cashflow, but it's usually accounted for differently)

Hey, 

I'm new 'round here and got sucked into real estate because, well, the stock market isn't performing where I want it to, and there's nothing I can do about it. I don't like that feeling of not being in control of what my money is doing so...real estate. I can't control the real estate market, but I can control who I rent to, how much I rent for, and in general I have lots of knobs to turn if the investment isn't working out how I want it to, unlike stocks.

I was originally interested in long term buy and hold, but I have a feeling that I might want to take the free capital I have available to me and invest it somewhere else. When I run the numbers for buy-and-holds I use ~60% gross goes to expenses unless I have a very good reason to use another number. I assume I'm paying all cash (so I look at coc returns assuming 100% cash) to make it easier to compare across properties. The very best cashflow I've been able to come up with using that approach is ~10% ROI. I want better than that. I'm willing to accept ~10% ROI if I can guess that appreciation in rents will take me to 15-25% in several years, but I'm not sold on appreciating home values making me money. That sounds like trying to time markets, and I'm not smart enough(nor involved enough in real estate) for that.

My (conservative) goals are to end up with 50k/yr semi-passive income within 5 years, and 100k/yr semi-passive income within 10 years. Originally I was thinking I could add 10k of buy-and-hold rentals per year (depending on what properties were priced at, SFH or small MFH), and hit those numbers. Now I'm thinking that I may have been too conservative, and I should maybe use the free money I have for some other purpose that would let me hit my income goals sooner. Semi-passive (to me) means "no flips" (that's active), but also "no stocks" where the performance of the asset is entirely outside my control. I don't want a second job, but I'd like to be able to say "let's try xyz to bring this up to par".

On the plus side, I have access to a decently sized amount of capital. It's a mixture of low interest rate loans(~3%, no down) and cash. I also have access to a fair amount of possible mortgage debt on the basis of my w2 income. I'm not quite accredited yet, so I won't be eligible to participate in any commercial deals. I'm not posting the exact amount intentionally, since this is a public forum. I will say it's under $1 million and over $100k, but feel free to PM me if you need details. Before anyone says "house hack" I'm in SF. I'm going to continue to live in SF, and I'm paying well under market rents.

Any suggestions for what I should start researching?

(also, I'm not paying for a "guru" course. I don't trust that.)

Be careful of your insurance as well, depending on who you use they may or may not allow college students, and if they do they may or may not allow college students in fraternities / sororities. There are options that don't care/it won't be hard to find them; just saying make sure the quote allows student renters.

One last thought: I haven't seen it outside of large apartment buildings, but you might want to include a floor plan with room dimensions and such. Not sure how much effect it will have on a townhouse rental, but I've found that useful as a person looking for an apartment.

Don't forget the yard if it has one and looks nice. 

Not to be too harsh, but these were my thoughts on seeing the ad: Funny that you advertise the 'huge new tub' and have no photos of it. What're you hiding? Oh, huge yard, no pics there either. One-half hallway of the inside, hmm...

Fridge washer dryer for 'small amount', what's that amount? 

Non-refundable carpet cleaning fee? Can you do that? Everywhere I've lived it has been against state laws. (Might be common in AZ tho) 

You repeat 'kids play' too much in 'kids play area in the front, yard for kids to play in'

I know I can be guilty of being a bit loose with terms so to be clear: Yes, I was referring to using repairs as a way to negotiate the price down. There's no reason the amount the seller drops the price has to match the amount the repairs cost, for example. (Sure a more sophisticated seller may put the repair funds in escrow, and probably does in the markets you're working in)

I read the number working across all markets as 'I won't get into a market that has a 7.7 GRM' not '5.5 is the best GRM across all markets everywhere'. It's a quick way to figure out what markets you're priced out of / have no interest in.

I dunno, I'd give Levi the benefit of the doubt here and assume he's holding firm and doesn't care if he gets this particular deal or not. If he knows his market will support 5.6GRM and he runs into a seller at 7.7 they likely won't strike a deal until the seller realizes they're asking too much. 

Would there be a better chance of making that deal if you go in with comps and a list of work that needs to be done to justify why your 5.6 GRM is the better number? Sure, but if you already have too many deals why go through the work?

If you're doing any more expensive improvements, make sure the appliances match. 

They don't need to be super expensive, but a yellowed fridge and a white oven looks far worse than white fridge and white oven, or black and black. 

Small update:

Decided to go with a HELOC. I found a bank that will do one on an investment property for 70% LTV, no closing costs adjustable to prime + 2%, max +/-4%/yr, no yearly fees, no other fees (they'll send an inspector but they won't charge me for it, etc)